Posted by: Katie May
The ABLE Act (Achieving a Better Life Experience Act of 2014) creates tax-favored accounts for children and adults whose disability occurred before age 26. These accounts can receive up to the annual gift tax exemption — which for 2015 is $14,000 per year. While beneficiaries are restricted to one account, anyone can contribute to the account which is modeled after 529 college savings accounts. These account programs will need to be implemented by the states.
According to the Congressional Budget Office, “assets in an ABLE account and distributions from the account for qualified disability expenses would be disregarded when determining the qualified beneficiary’s eligibility for most federal means-tested benefits. For SSI [Supplemental Security Income], only the first $100,000 in each ABLE account would be disregarded.”
